FOR IMMEDIATE RELEASE
January 22, 2008
Contact Jason Moon: 517-335-1700

OFIS Warns Investors about Attending Free Meal Seminars

LANSING - Michigan Office of Financial and Insurance Services (OFIS) Acting Commissioner Ken Ross cautioned today that a major new national study shows that unsolicited invitations to “free investment meal seminars” should raise red flags for Michigan’s older investors.

A recent year-long examination conducted by members of the North American Securities Administrators Association, the U.S. Securities and Exchange Commission, and the Financial Industry Regulatory Authority scrutinized 110 securities firms and branch offices that sponsor sales seminars and offer a free lunch or dinner to entice attendees.

Here are some of the report’s key findings:

• All of the “seminars” were actually sales presentations, although they were advertised as “educational workshops” where “nothing will be sold.”
• Half of the “seminars” featured exaggerated or misleading advertising claims, such as: “Immediately add $100,000 to your net worth,” and “How $100K can pay 1 Million Dollars to Your Heirs.”
• Nearly one-quarter of the “seminars” involved potentially unsuitable recommendations, such as a risky investment recommended to an investor with a conservative investment objective, or an illiquid investment recommended to an investor with a short-term need for cash.

“This study confirms what we’ve known for some time—that seniors attending these seminars are often putting themselves in financial danger. We’ve found that seniors are often exposed to misrepresentations, high-pressure sales tactics and outright fraud,” Ross said. “The old saying that ‘there’s no such thing as a free lunch’ is as true today as it ever was.”

Free meal sales seminars are often advertised in local newspapers, through mass-mailed invitations, mass-email, and on websites.  The seminars are commonly held at upscale hotels, restaurants, retirement communities, and golf courses. In addition to providing a free meal, the firms and individuals that conduct these seminars often use other incentives such as door prizes, free books, and vacation deals to encourage attendance.

Advertised with names like “Seniors Financial Survival Seminar” or “Senior Financial Safety Workshop,” these seminars offer “free” advice by “experts” on how to attain a secure retirement, or offer financial planning or inheritance advice.

While the ads may stress that the seminars are “educational,” and that “nothing will be sold,” many of these seminars are intended to result in the attendees opening new accounts with the sponsoring firm, and ultimately, in the sales of investment products, if not at the seminar itself, then in follow-up contacts with the attendees.

Often, in the follow-up sales pitch, the salesperson recommends liquidating existing investments and using the proceeds to buy indexed or variable annuity products, which may be unsuitable for seniors.

Seniors seeking educational insights and information should be aware that the primary goal of the sponsors of these free meal seminars is to obtain new customers and sell investment products. Some salespeople holding seminar events may also possess a “senior specialist designation” and represent that they have special expertise in dealing with financial issues important to seniors.

“While some of these designations reflect bona fide credentials in the field of advising seniors, many do not. These titles can serve as an easy way for an unscrupulous sales agent or adviser to gain a senior’s trust, which is the first step in a successful fraud,” Ross added. “ I strongly advise investors to contact OFIS with any questions about an investment product, broker or adviser, before making an investment.”font>